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Super funds jostle for new customers -

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Super funds jostle for new customers

AM - Friday, 1 July , 2005 08:06:00

Reporter: Brendan Trembath

TONY EASTLEY: Also today, as many as five million Australians will get the right to choose which
fund manages their retirement savings.

The nation's super funds manage more than $700-billion, and from today they find themselves
competing for new customers while trying to keep existing members.

Brendan Trembath reports there are concerns that some people will be needlessly pressured to move
from fund to fund.

EXCERPT FROM ADVERTISEMENT: Gentlemen, we are being threatened by a new super power.

BRENDAN TREMBATH: It's a lot like an election campaign, with superannuation funds spending big on
advertising to convince swinging voters to change sides and loyal voters to stay loyal.

Among the swinging voters is David Manton, an accountant who says he's thinking about switching
from a corporate fund into an industry fund.

DAVID MANTON: I've just been sucked in by the advertising on television at the moment saying they
have better returns, but I'll probably do the research.

BRENDAN TREMBATH: Chloe Volkman, a legal secretary, is partial to a company better known for
selling phones.

CHLOE VOLKMAN: Actually Virgin, cause I've got a Virgin mobile. I was thinking maybe like if I get
everything with Virgin I could get a discount.

BRENDAN TREMBATH: The loyal voters include Scott Davis, an air-conditioning foreman, a rusted on
member of a super fund established for construction workers.

SCOTT DAVIS: Our superannuation's got the highest return out of any, like, we outdone all the banks
and that, no, it's a very good system.

BRENDAN TREMBATH: No one has to change funds but the pressure is on many to do so.

This concerns former Reserve Bank governor Bernie Fraser, an independent director of three industry
funds.

BERNIE FRASER: It's almost expecting the members to be as knowledgeable as the financial planner,
and that's not the case, of course. The members are a long way behind, and there is a risk of some
members being duped along the way, I think.

BRENDAN TREMBATH: Australia's corporate watchdog plans to keep an eye on financial planners who
earn commissions from funds they recommend.

The Australian Securities and Investments Commission has recruited about 300 consumers to help
identify any financial planners who push people to unnecessarily change funds.

Delia Rickard is the Commission's Deputy Director of Consumer Protection.

DELIA RICKARD: We'll be looking out to ensure that consumers who are seeking advice get good
quality advice. So we're going to have 300 or more consumers out in the marketplace collecting 300
statements of advice so we can look at the advice that is actually being given on the ground in
relation to choice to make sure that there's no inappropriate churning of consumers from one fund
to another.

BRENDAN TREMBATH: But the Financial Planning Association says its members are giving responsible
advice.

Board member Andrew Heaven:

ANDREW HEAVEN: We just don't believe that consumers should make complex financial decisions based
on 30-second television ads. One July is the start date, not a deadline. Don't rush to change. Get
advice.

BRENDAN TREMBATH: Superannuation experts say consumers should consider a fund's longer-term
performance.

They say annual rankings showing which funds produced the highest returns over the past year are
useful, but only a start.

Former central banker Bernie Fraser again:

BERNIE FRASER: It would be much better to look over a longer period than a year and to see how
they've been averaging out, because returns fluctuate, and in some cases can fluctuate pretty
violently.

TONY EASTLEY: Bernie Fraser, a former Reserve Bank governor, now an independent director of three
super funds, ending that report from Brendan Trembath.